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Running your own retail store is undoubtedly a thrilling journey filled with fashion, style, and (mostly) fun things. But let's face it – tax season can be a bit daunting. Today I'm here to talk to you about just ONE of your tax obligations as a business owner – filing & sending any required 1099 tax documents.

But what does that even mean? And who needs to receive a 1099?

In simple terms, a 1099 is a tax form that reports amounts you've paid to others, outside of employee wages. As a boutique owner, this could include payments to social media managers, models, photographers, virtual assistants, or really anyone you've hired for services. It also includes rent payments, even if it’s just renting a small space out in another's storefront.

Sending 1099s is your way of letting the IRS know that you paid certain individuals or businesses for services that THEY need to pay taxes on.

Essentially, you’re helping the IRS make sure these individuals & businesses don’t commit tax fraud.

So who needs to receive a 1099?

Just because you paid someone for rent or services during the year doesn't automatically mean they need to be sent a 1099. There are a few other criteria that they must meet:

1. You paid them $600+ during the calendar year
2. You paid them via cash, check, ACH, or a personal payment processor (Venmo, Zelle, etc…)
3. They do NOT file taxes as a corporation

If a vendor reaches the first 2 criteria, then you will need to request a copy of their W-9 to determine if they meet the 3rd one. (Here's a blank copy you can print and send them, if they need it) Be sure to keep their W-9 somewhere safe because you will need the information provided on that form to file their 1099.

The only exception to that last requirement is lawyers – they need a 1099 even if they’re taxed as a corporation.

When do you need to file these?

Mark your calendars, because the deadline for sending out those 1099 forms is January 31st.

When you file your OWN tax return to report your business income & expenses, you will be asked if you filed all required 1099s. If you say no, you could be charged fines. And, if you say yes if you really didn’t…well, that’s lying on a federal document…which is illegal. So don’t do that.

How do you file and send the 1099s?

There’s a couple different online softwares you can use to help you file these. I use one called Tax1099. Using a software will ensure the copies get sent to both your vendor & the IRS.

Otherwise, if you’re not comfortable doing this yourself, many bookkeepers & Accountants offer this for a small fee.

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Congratulations, you're now armed with the 1099 knowledge needed to tackle them like the boss you are! Remember, organization is your best friend, and staying on top of your bookkeeping records throughout the year will make this process easier for you!

If you ever feel overwhelmed, don't hesitate to seek help from a bookkeeping or tax professional – we’re here to make your life easier. This is something we help ALL our clients out with each year – helping track which vendors are meeting the requirements so we can request a W-9. If you want help with this in your business, then schedule a coffee chat with me today to see if we'd be a good fit!